SMG SM 131 Study Guide - Midterm Guide: Sarbanes–Oxley Act, Accounts Payable, Retained Earnings

• School: Boston University
• Department: School of Management
• Course: SMG SM 131
• Professor: Rebecca Nichols

Document Summary

Accounting- system analyzing, recording, and summarizing the results of a business"s activities and then report results to decision maker: private accountant- employee of business, public accountant- provides advice to variety of businesses. Main goal-capture information about operating, investing, and financial activities of company so it can be reported, 2 types reports: managerial accounting reports- detailed financial plans, used by internal employees, financial accounting reports- for outsiders (creditors, investors, customers) Basic accounting equation: assets= liabilities + stockholders equity. Separate entity assumption- financial reports of a business that are assumed to include results of only that businesses activities (business itself is viewed as owning assets/ liabilities) Liabilities- money that you borrow (that outsiders put into company: borrowing money from bank- note payable, borrowing from suppliers- account payable, owe wages- wage payable, taxes to gov"t- taxes payable. Assets- things you buy that create value. Revenue- money customer gives you: spend majority revenues running a business- expenses, revenue- expenses= profit.